[T]he High Court ruled that the case did not impact on the freedom of religion... The constitution says, ''no religious test shall be required as a qualification for any office or public trust under the Commonwealth'' and Mr Williams had argued that the definition of school chaplains included a ''religious test'' for office.

But the court found that school chaplains were not Commonwealth employees, but rather were engaged by an external organisation, Scripture Union Queensland....

But by majority the court held that the funding agreement between chaplaincy provider ... and the Commonwealth was invalid because it was beyond the executive power of the Commonwealth.

Because there is no legislation authorising the agreement, the Commonwealth argued the payments were supported by ... section 61 of the constitution, which provides that the executive power ''extends to the execution and maintenance of this constitution, and of the laws of the Commonwealth''. But the majority ... rejected this, finding that section 61 did not empower the Commonwealth to enter into the funding agreement or make the challenged payments.